Title: When to Ally and When to Acquire: Expansion Strategies of Multinational Firms in China
Reference Number: 1118
Publication Date: March 2005
JEL Classifcation:
Author(s):

Yigang Pan
York University

Zhigang Tao
The University of Hong Kong

Jiangyong Lu
HK Institute of Economics and Business Strategy

Abstract:

Most companies do not compare acquisition and alliance before picking one, and often end up with the "wrong" thing (Dyer, Kale, and Singh, 2004). Even though academic literature does compare acquisitions and alliances, there exist inconsistent explanations and findings. In this study, we reexamine the choice of multinational firms in partial-ownership acquisitions and start-ups (joint ventures) when they expand into an emerging economy, China. Drawing upon the existing literature, we examine the influence of product relatedness, competitive rivalry, task-specific knowledge, and location-specific knowledge. Our sample consists of 2,152 partial acquisitions and start-ups in China in 257 product sectors from 23 countries between 1985 and 2001. Our findings offer new insights on partial ownership international expansion strategies.

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Key words: Acquisitions, Start-ups, Ownership, Diversification, FDI

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Last modified: 03/29/2005